It was the workshop of the world, exporting goods far and wide. But Britain's industrial decline hit Birmingham hard and tens of thousands of manufacturing jobs disappeared as factories closed. The latest recession shattered what fragile confidence had been restored as unemployment rose faster in the West Midlands than anywhere else in the UK.

Now Britain's second city is fighting back once more. Not content to wait for a recovery in exports, Birmingham is courting foreign investors to bring jobs and business to the Midlands.

It is not an easy task for a city that has made the headlines for skills shortages, job losses and closures. But there is plenty to shout about, said Business Birmingham, the organisation set up to get money flowing into the region.

"Birmingham historically has not promoted itself internationally as a place to do business," said Wouter Schuitemaker, Business Birmingham's investment director. "There's so much Birmingham has in terms of its universities, its low-carbon research and development, digital media. The city is now starting to realise that if it tries to talk itself up it has quite a lot to talk about."

His organisation was set up last year with the goal of creating 12,000 jobs by mid-2014 from inward investment across Greater Birmingham, Solihull and the Black Country.

The plans are ahead of schedule, creating almost 1,800 jobs in the eight months to December. Much investment is coming from the US but second to that is Germany, where ties should grow stronger this year, Schuitemaker said. The German Christmas market outside his office, now in its tenth year, is testament to the city's partnership with Frankfurt since 1966. There are more than 300 German-owned companies across the region, including steelmaker ThyssenKrupp and Deutsche Bank, which has a processing centre in Birmingham.

Pipeline

Schuitemaker admits the global economic outlook is hard to call, particularly in the eurozone, but he stresses that Birmingham's inward investment plans are on track.

"Some 120 projects are in the pipeline at the moment that will convert or otherwise within the next 12 or 24 months. Obviously it is early stage for us and you'd expect growth to level out but it won't for some time. We haven't seen any tapering off at all," he said. The weak pound is boosting interest in investing in Britain in general, he said, and much of the money is going to the Midlands. In 2011, Birmingham attracted the most foreign direct investment by value of any UK regional city – more than £540m.

The key for the region is turning that investment into new jobs. Things remain tough with an unemployment rate above the national average and one of the highest rates of economic inactivity in the country. At 9.2% for the West Midlands, unemployment is well above the national rate of 8.3%. In the last year employment – the number of people in paid work – has dropped by 44,000 to 2.4 million, its lowest level in 11 years. So 12,000 jobs from inward investment would be welcomed but only cover a fraction of job losses.

The long-term trend for inward investment projects to create fewer jobs is worrying. According to experts at consultancy Ernst & Young, in 1997 foreign direct investment projects tended to generate approximately 100 jobs each. Projects in 2010 on average generated 37 jobs, although in the UK as a whole it was lower, 29 jobs.

The consultants said that in the latest full-year figures on investment into the UK the Midlands was the most attractive destination outside London, with an annual increase of more than 35%.

Business Birmingham has a whole list of why investors are choosing the region. The Mercer Quality of Living 2011 global survey ranked Birmingham as the most attractive UK regional city for quality of life. There is the central location, an expanding Birmingham airport and train links that are expected to cut journey times to London to less than an hour under high-speed rail plans.

"We are a wholesale company and so depend on good infrastructure and here we have quite a lot of hubs around Birmingham and the airport is nearby," said Sabine Kinner, managing director of Ostermann's UK operations.

Skills are also high on investors' agenda and 70% of inquiries to Business Birmingham are skills based.

The West Midlands' dearth of educational qualifications was highlighted in a report this year. In the Birmingham area of Hodge Hill one in three working age people had no qualifications. It was the worst result in England and compared with one in 10 for Britain as a whole, according to the University and College Union. Of the 20 constituencies with the highest percentage of people with no qualifications, eight were in the West Midlands.

But Schuitemaker said there are still reasons the region can attract skills-intensive businesses. There are 14 universities in the inward investment body's catchment area with 97,000 students.

"There are a lot of naysayers in and about Birmingham but we are a net retainer of our graduates. There's a growing workforce," he says.

The region once renowned for metal bashing has a base in digital technology, with a fifth of the UK's computer games workforce in the area and companies including Microsoft-owned games developer Rare. The city also wants to develop advanced manufacturing and engineering, financial services and low carbon technologies.

Outcry

The Business Birmingham team has been wooing politicians and business people at home and has sent international trade delegations to India, France and five cities across the US. One trip provided a much-needed chance to try to calm local fears about the pitfalls of doing business with foreign companies – overseas links have not always been popular. There was outcry when US food company Kraft bought chocolate-maker Cadbury in 2010 and Business Birmingham members met Kraft boss Irene Rosenfeld to encourage the company to invest in the city.

In the year ahead, against the backdrop of shaky business confidence in many developed markets, the city will be courting more countries. The latest trends suggest it may need to raise its game to stay ahead. Ernst and Young's report warned that while the UK was the top destination in Europe, Germany made the largest advance in 2010, with the highest level of Chinese investment.

Schuitemaker did not appear worried: "We are making sure we don't put all our eggs in one basket and engaging with emerging economies as well. As a region we are exporting 10% more to BRICS (Brazil, Russia, India and China) than the national level."

Indian-owned Jaguar Land Rover announced last month the creation of 1,000 jobs at its plant in Solihull in the West Midlands. Birmingham corporate lawyer Mark Beardmore says the announcement was a big boost.

He said: "I think Birmingham is going through a real sense of confidence. The Jaguar Land Rover story, you can't talk down how good that was for the region - it's going to create jobs, there's investment going in." Beardmore's firm, DLA Piper has worked on a number of foreign investment deals in the region as well as with local companies expanding in international markets.

"Birmingham is quite rightly seeing itself as a city you do business in. It's not far from London but it's a cheaper cost base than London. We can feel quite a buzz here," Beardmore says.

Made in England

Fracino, Britain's only manufacturer of commercial coffee makers, puts a "Made in England" badge on every one of its machines. "People abroad, especially in the far east and Middle East, value British engineering," said its marketing boss, John Cook.

It should be is music to the ears of a British government trying to revive a flagging economy with a "march of the makers" and booming exports. Indeed, prime minister David Cameron recently praised the Birmingham manufacturer for selling coffee-makers to Italy.

The company that was started in a garden shed almost 50 years ago is now enjoying annual sales growth of 20% and has seen exports soar to make up a quarter of business. Its machines, designed for cafes and other commercial caterers, are going as far afield as Australia, New Zealand, the far east, Russia, South America and Thailand.

Its Birmingham plant was doubled this year and Fracino increased its workforce from 30 to 40 to cope with growing demand. It makes 60 coffee machines a week now, and expects to be making 100 a week by the end of next year.

Cook said economic turmoil had done little to derail growth. "The market seems to be resistant. People are still drinking coffee. It's a bit like going out and having a beer now."

Cameron and chancellor George Osborne want more companies to expand their exports as they seek to rebalance the economy away from a dependence on domestic demand.

Fracino, which exported virtually nothing four years ago, said the key to overseas sales was not trying to sell goods yourself but going out and finding good agents.

"Get your website, make sure you have got the right product, sell at the right price, make sure you have got the right people to sell it abroad," says Cook.

It is a far cry from the company's roots as an importer supplying the cafes of Britain with Italian espresso machines. That all started when Midlands engineer Frank Maxwell brought a machine home from a trip to Italy in the 1950s and stripped it down. He had been collecting bits from the bustling coffee bars of Soho in London. "I liked the ambience and the intrigue of it and then from this little machine the spark was lit," Maxwell said.

"So I did a bit in my garden shed which my wife thought was a terribly dangerous thing to do, how could you risk your whole future on a coffee machine?"

After selling other people's products Maxwell started making his own and his engineer son Adrian joined to develop new machines. They retail from about £650 plus VAT to £4000, netting Fracino annual sales of £3m.

Maxwell's advice to anyone hoping to join the march of the makers?: "You have got to go and look for it. If you sit on your backside you won't do anything."